HM Treasury has decided not to abolish land remediation relief after all, following a strong reaction from brownfield developers who faced a double-whammy as they are also coping with the already approved end to landfill tax exemption.
The move was announced as part of the final decisions on abolition of 43 tax reliefs announced in the 2011 Budget.
Consultations were then held on removing 36 of them and final decisions have been taken, with four, including land remediation, surviving unscathed "for exceptional reasons".
"Based on the evidence received in the consultation, the Government has decided that removal of this relief, in conjunction with the already agreed removal of the exemption from landfill tax, would risk undermining the Government's plans to support the housing and construction sectors through planning reforms and the release of large areas of publicly owned land for development," says the Treasury response.
It says around 1,300 companies a year claim relief worth about £40m and the Government initially claimed it failed to deliver its policy objective.
But respondents argued that removing the relief would affect brownfield regeneration.
"Several companies claimed that they take land remediation relief into account when considering sites and that removal of this relief would make a significant number of their planned projects financially unviable," says the document.
"Information was also presented that suggested abolishing this relief would exacerbate financial pressures on this sector resulting from the removal of the exemption from landfill tax for soils and waste from contaminated sites, which was agreed in 2009 and is coming into effect shortly."
